Markets Flat Ahead of PPI

US inflation key after encouraging CPI readings

Everything is looking a little flat in financial markets on Thursday, with most of Europe seeing small gains and US futures a mixed bag ahead of the open.

The week’s big data release gave the markets a small bump on Wednesday as it took some of the pressure off the central bank even if it doesn’t change its plans around tapering.

Inflation being transitory is crucial to tightening of monetary policy being done in a gradual way and the CPI numbers aligned with the Fed’s narrative around price pressures this year.

It’s looking a little light on the data front for the rest of the week, with today’s PPI number the only remaining release of any real significance. The data yesterday was encouraging but any signs here that it was a blip could unwind all of yesterday’s good feeling and replace it with anxiety once more.

Should the data offer further comfort on the other hand, equities could catch another bid and take further pressure off US yields and the greenback.

UK sees strong growth during second quarter reopening

The UK economy is almost back to its pre-pandemic size after growing 4.8% q/q in the second quarter, leaving it only 4.4% below its peak in Q4 2019.

While there was a slight downward revision to the Q1 figure and a small miss on industrial and manufacturing production, the data was very encouraging overall.

Strong growth in the second quarter was driven by consumer spending as lockdowns eased, with services output rising strongly in June ahead of the final restrictions being dropped in July.

This bodes well going into the third quarter and the July number next month will be very interesting indeed, as the UK moves ever closer to fully closing the gap on lost output during the pandemic.

The country is now in a very strong position going into the end of the year and next. Of course, this is contingent on the removal of restrictions not coming back to bite the government as infections rise.

But early signs are promising with the high take-up of vaccines meaning higher case loads are not leading to nearly the same levels of hospitalisations and fatalities as before. Of course, the Autumn and Winter months bring their own challenges.

The pound initially dropped following the data release, probably as a result of q/q GDP being in line and manufacturing and industrial production missing, but it quickly rebounded to trade back around the pre-release levels. While challenges remain for the UK, the pound could benefit from the continued recovery in the months ahead.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.